The accelerating decline and graying of Japan’s population is expected to threaten the sustainability of administrative functions in large numbers of municipalities across the country in the not-so-distant future. A panel of experts at the Internal Affairs and Communications Ministry has compiled a report calling for the creation of area networks of cities, towns and villages to take charge of key administrative services for residents. Given the nation’s daunting demographic trend, it seems obvious that tasking each small municipality to provide all services for local residents will be both inefficient and unsustainable. To ensure the future sustainability of administrative functions as the population shrinks, a deeper, more fundamental reform of the local government system should be explored.

What was considered by the expert panel was the shape of local administration in Japan’s demographic landscape around 2040, by which time most of the postwar baby boomers’ children — born in the first half of the 1970s — will have reached retirement age. At this time, the nation’s population of people 65 or older will peak at about 40 million. The populations in more than 90 percent of the municipalities outside of the big metropolitan areas will be smaller than today, and the number of those with fewer than 10,000 residents will have increased by 26 percent from 2015. Local governments across Japan will face an acute shortage of younger workers to cover their manpower needs.

Public transportation and other basic services will be harder to maintain in rural municipalities with diminished populations. Many of those local governments will be in such dire fiscal straits that they won’t be able to replace their aging public infrastructure. The fiscal health of municipalities in big urban areas may not be much better. In Tokyo, the sheer increase in the number of elderly residents will boost social security costs and result in a severe shortage of nursing care workers and care facilities. Nonetheless, local governments will be primarily tasked with maintaining administrative services for their residents, ranging from welfare to medical care, education and social infrastructure.

The panel’s report concludes that if the current system is maintained, it will be difficult to continue the administrative functions that support local residents’ lives and industries. It proposes ending the practice in which each municipality takes charge of all services for residents, and calls for the creation of a network comprising multiple municipalities in an area that will work together to provide administration services for the area’s residents, including city planning and emergency medical care. For smaller municipalities in remote mountainous areas that would find it hard to work with neighboring municipalities, the panel says that prefectural governments should provide them with direct support. Regarding the expected manpower shortage in municipalities, the report calls for measures to enable them to maintain their functions even at half their current staffing levels through greater automation of clerical work and the standardization of information systems and administrative procedures.

The report is expected to serve as the basis of discussion at a government council on local administration, which Prime Minister Shinzo Abe has instructed to devise reforms of the local administrative system in response to the demographic changes. The government plans to prepare legal steps for such reform after obtaining the council’s proposal within two years.

One question is whether the proposed measure will serve their intended purpose. Already there are mechanisms that enable small municipalities to work with larger neighboring cities to deal with local residents’ medical, welfare and education needs, but the mechanism has reportedly been put to little practical use. The panel’s report said that providing a legal framework for networking among the municipalities would facilitate collaboration on matters where they may find it difficult to adjust their divergent interests.

Another question will be whether the proposed steps will be sufficient to cope with the anticipated radical changes in the demographic landscape. A private think tank report a few years ago gave a stern warning that roughly half of the nation’s cities, towns and villages may not be sustainable in 2040 due to the population flight to urban areas and the depletion of the youth population. It is questionable whether municipalities with diminished populations can provide basic administrative services to residents. Further mergers and reorganization of the municipalities in depopulated areas may need to be considered as a solution to sustaining administrative functions to meet residents’ needs. The radical demographic shifts in coming decades will require more fundamental reforms of the local administration system.

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